The number of bilateral and multilateral investment treaties has surged in the past decade. Investors are actively using these treaties to bring claims against sovereign states, and many of these tribunals have come to conflicting - if not diametrically opposed - results on the meaning of substantive treaty rights. This article evaluates the positive and negative attributes of such inconsistencies and the impact upon the rule of law. The article recommends building safeguards into the current dispute resolution process to minimize the negative impact of inconsistency and maximize its positive attributes.

In France, they're apparently not fond of letting people out of contracts on the grounds that conditions haven't been fulfilled. One who claims the right to exit because of an unfulfilled condition is obliged to show that he has "actively and genuinely [done] all he can to cause the condition to be fulfilled."

Thus, in the leading case of Lefebvre v. Segard (May 7, 2002) (translation available from the new UTexas web site), purchasers of land had a condition which allowed them to exit the deal if they did not obtain a mortgage loan. They provided four affidavits from lenders that their applications had been denied. But since it was impossible for the court to determine what the apparently solvent purchasers had told the lenders, the condition was deemed to be met and the purchasers were stuck.

Check out the latest edition of “The Onion.”This week features a humorous story entitled “Night on Town Fails to Rekindle Failed Business Relationship.”The non-renewal of the contract between two former business partners apparently still stings, in a way that cannot be fixed by a visit to Outback Steakhouse and a game of pool.

At one session last summer at the joint AALS Contract/Commercial Law session in Montreal, some folks in one of the discussions made it clear that they did not view their law schools as "vocational schools" for the training of lawyers.

So maybe there's room for some new institutions who do think of law schools as vocational institutions. Three of them are planning on starting new law schools. A new article in Inside Higher Education (thanks to Michael Olivas of the U of Houston for the tip) talks about proposed new law schools at Drexel University in Philadelphia, Pa. (left), Elon University in Greensboro, N.C., and Mills College in Oakland, Ca.

One thing's for sure -- from a look at this year's Faculty Appointments Register, none of them will have trouble finding faculty.

As we consider the importance and growing power of international law in contracts, this article might give us pause to reconsider the precedent for such laws.

Stephen Sachs writes:

Modern advocates of corporate self-regulation have drawn unlikely inspiration from the Middle Ages. On the traditional view of history, medieval merchants who wandered from fair to fair were not governed by domestic laws, but by their own lex mercatoria, or law merchant. This law, which uniformly regulated commerce across Europe, was supposedly produced by an autonomous merchant class, interpreted in private courts, and enforced through private sanctions rather than state coercion. Contemporary writers have treated global corporations as descendants of these itinerant traders, urging them to replace conflicting national laws with a law of their own creation. The standard history has been accepted by legal scholars across the ideological spectrum, by economists and political scientists, and by those drafting new regimes to govern Internet commerce.

This Article argues that the traditional view is deeply flawed. Returning to the original sources - especially the court rolls of the fair of St. Ives, the most extensive surviving records of the period - it demonstrates that merchants in medieval England were substantially subject to local control. Commercial customs and substantive laws varied significantly across towns and fairs, and did not constitute a coherent legal order. The traditional interpretation has been retained, not for its accuracy, but for ideological reasons and for its long and self-reinforcing pedigree. This Article takes no position on the merits of shielding multinational actors from domestic law; it merely denies that the Middle Ages provide a model for such policies.

Sachs, Stephen E., "From St. Ives to Cyberspace: The Modern Distortion of the Medieval 'Law Merchant'" . American University International Law Review, Vol. 21, No. 5, 2006

Ask Quentin Tanko, who signed four one-year contracts agreeing to participate in the National Health Service Corps Scholarship Program. The contracts provided that the government would pay Tanko’s medical school tuition and other reasonable expenses. In exchange, Tanko agreed to provide health services in an underserved area when he graduated; he promised one year of service for every year the government funded his tuition. The first contract covered the first school year. Each additional contract covered each additional year of school, and adopted the terms of the first contract.

The contracts set forth the government’s remedy if Tanko breached, and provided for two possible scenarios. The first scenario:

If a student cannot provide health services in [a shortage area] because he must leave school for academic or disciplinary reasons, voluntarily terminates his schooling, or "fails to accept payment . . . in whole or in part, of a scholarship under this contract," the student is only responsible to "repay to the United States all funds paid to the applicant . . . within 3 years of the date the applicant becomes liable to make payment."

The second scenario:

If . . . the participant fails to provide his period of service obligation "for any reason other than those [specified above,]" the contracts provide "the United States shall be entitled to recover the amount equal to three times the scholarship funds awarded, plus interest."

Tanko accepted the scholarship from the government for his first two years of medical school. After his second year, however, he advised the government that he would not be accepting the scholarship money for the next two years. When he graduated, Tanko did not provide his two years of service in an underserved area (which he had promised in exchange for the first two years of scholarship money). The government demanded that Tanko repay his debt for the first two years of school, including treble damages, plus interest. Tanko received a total of $88,731 in scholarship funds; applying treble damages and interest his total bill came to $380,964.45.

ContractsProf Blog today celebrates its first anniversary. The blog was started November 4, 2004, with two editors. Today, the staff is eight (Eric Goldman of Marquette is joining us) and we've built a steady base of readers, including law professors, students, judges, and practicing lawyers. Over our first year we averaged more than 350 readers (with more than 450 page views) a day, and more than 10,000 readers (13,000 page views) a month. We have regular readers on every continent except Antarctica.

Thanks for your continuing support! Remember, this is the AALS Contract Section blog, so if you have news to share or run across anything of interest, please forward it to one of our editors.

The aftermath of Hurricane Katrina has brought with it a lot of changes. Some may be good, some not so good. Christopher Yukins (Geo. Washington) thinks recent changes to the federal procurement laws that resulted from the disaster fall into the latter category. His Hurricane Katrina's Tangled Impact on U.S. Procurement is forthcoming in the Government Contractor. Here's the abstract:

In the wake of Hurricane Katrina, the U.S. Congress passed new exceptions to U.S. procurement rules. The most important new exception, passed at the recommendation of the Bush administration, raised the limit for micro-purchases - essentially unregulated purchases - from $2,500 to $250,000. In practice, this will mean that Katrina relief purchases may be made, up to $250,000 per order, without any effective transparency or competition, and without honoring the many socioeconomic requirements that are an important part of the U.S. procurement system. This comment reviews that emergency legislation, and suggests that the new law, by abandoning basic principles of sound procurement, raises real risks in the post-Katrina relief effort, including risks of corruption and risks of gross failures in best value procurement.

A contractual choice of forum clause that applies to “any dispute hereunder” applies to claims for breach of fiduciary duty, according to a recent decision by a federal district court in Texas.

In the case, William Noble Rare Jewels turned over a valuable sapphire ring to the Christie’s auction house for sale. Both Noble and Christie’s had obtained appraisals that indicated that the sapphire was of Kashmir origin, which made it especially valuable. At the auction, the ring was sold to a buyer, one John Doe. Doe subsequently got four appraisals on his own. Two were inconclusive and the other two concluded that the sapphire was from Ceylon, not Kashmir. Christies’ allegedly allowed the buyer to rescind the sale and refused to sell it again as a Kashmir. Noble sued in Texas, although the Christie’s contract provided that all actions must be brought in New York. Everyone apparently conceded that the breach of contract claim was covered by the forum selection clause:

This Agreement shall be governed by and construed in accordance with the laws of the State of New York. In the event of any dispute hereunder, . . . the parties hereby consent to the exclusive jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in the Southern District of New York . . . .

But Noble argued that his action for breach of fiduciary duty was not contractual, and thus was properly brought in Texas. The court disagreed. The court, applying federal common law to the question, concluded that the breach of fiduciary duty action was related to the contract claim, since Christie's duty was contractual and the claimed breach was a failure to perform under the contract. Since a problem of performance was a “dispute under” the contract, the forum selection clause precluded the Texas courts from hearing the case.

1677: Princess Mary, daughter of the future James II of England, marries William, son of the Stadholder of the Netherlands. As William & Mary, they will subsequently throw her father off the throne when he tries to give religious liberty to non-Anglicans.

1861: The Territorial University of Washington is founded at Seattle with 30 students. It will fail three times over the next few years, but will ultimately become the largest university in the Northwest, dropping the "Territorial" when Washington becomes a state.

1899: Sigmund Freud's book, the Interpretation of Dreams, is published. He considered it his greatest work, but it initially flops, taking several years to sell out the first 600 copies.

1916: Walter Cronkite is born at St. Joseph, Missouri. After dropping out of college, he'll later become The Most Trusted Man in America. Even today, polls show him as The Most Trusted Man in Television News, which says something either about him or about Television News.

1924: Nellie Tayloe Ross of Wyoming becomes the first woman to be elected Governor of a U.S. State.

1928: Fabled crime boss Arnold "Mr. Big" Rothstein is shot dead at the Park Central Hotel in New York City, after he refuses to pay $380,000 he lost in what he claims was a rigged poker game.

The New York Times is reporting that the musicians at Radio City Music Hall are striking over salaries and overtime pay.Apparently the high-kicking Rockettes will continue to perform in the holiday spectacular, albeit to taped music.Although there was some speculation that the Rockettes might also walk, word had it that their contracts forbid sympathy strikes.

Few subjects in contract law are getting more attention these days than the problems of "indefinite contracts." In the specific situation in which sophisticated parties deliberately leave gaps in their agreements, when should courts intervene to fill them?

Option theory is beginning to generate robust insights in the legal literature, and it is particularly well-suited to contract law. This Article develops an embedded options theory of indefinite contracts, focusing on the proper scope of the indefiniteness doctrine - a core principle of contract law invalidating contracts that are too vague. This approach offers answers to two puzzling questions. First, why do parties write deliberately vague contracts, especially when they can contract with precise, verifiable metrics at a low cost? Second, what should a court do when confronted with an indefinite contract? Should it throw out the entire contract, impose a popular term, or do something else?

This Article shows how the use of indefinite terms plus active judicial gap-filling can create an embedded option - the valuable opportunity to take action in the future based on outcomes that are uncertain today. It then argues that these embedded options can be problematic from an economic point of view because they are unlikely to be fully appreciated by both parties to the contract. This means that embedded interpretative options will sometimes distort efficient trade and investment decisions.

In short, there are under-explored costs to contractual gap-filling. Ultimately, then, courts should resist the temptation to instinctively plug gaps and recognize that the indefiniteness doctrine has a meaningful role to play in contract law.

An appellate court in North Carolina recently held that an "internet service" company’s contracts violated usury laws. The company’s contracts offered customers an instant "cash rebate" and the opportunity to use the internet at scheduled times at the company’s offices. In exchange, the customers committed to make bi-weekly payments for one year. The total amount of these payments (between $40-$100 a month) was about five times the value of the "rebates," and the court held that the "rebates" were usurious loans rather than legitimate service contracts.

The company argued that it was an internet service provider, and the contracts for services were, therefore, legitimate. The court did not buy this argument – it held that the company’s sale of internet services was a "guise" for a small loan business. The court was particularly swayed by the facts that (1) many customers averred that they had signed up for the internet services solely to get the instant cash; (2) the internet services, which were only available during limited hours at the company’s office, had "scant monetary value" and were offered by other providers more conveniently and for much less money; and (3) the so-called "rebates" did not fall within the Black’s Law Dictionary definition of "cash rebates," which contemplates the return of a part of a payment as a discount or reduction.

1783: John Austin becomes the last person to be publicly hanged at London's Tyburn Gallows. No, this is a different John Austin.

1817: The Bank of Montreal, Canada's oldest, opens for business in a small building on the Rue St. Paul under the leadership of a retired grocer. As BMO Financial Group, it now has over 1,000 branches and is actually headquartered in Toronto.

1838: The world's top-selling English-language newspaper, the Bombay Times & Journal of Commerce (now the Times of India) is founded.

1883: Bandit-poet Charles "Black Bart" Boles robs his 28th and last Wells Fargo stage. He drops a handkerchief at the scene which will eventually lead to his capture in San Francisco by company detectives.

1911: William C. Durant, who had lost control of fledgling General Motors the year before, partners with famed French auto racer Louis Chevrolet to create a new automobile company, which will itself later become part of GM.

1954: Toho Film Company Ltd. releases the first installment of one of the world's great film franchises, when Gojira (U.S. title Godzilla) erupts out of the water to ravage Tokyo.

1966: The California Court of Appeals says schoolteacher Michael Odorizzi can get to go to a jury on his claim that his resignation from the Bloomfield School District was invalid due as a result of duress and undue influence.

1998: Jesse "The Body" Ventura becomes the first actor from the 1978 film Predator to be elected to a major political office, when he is elected Governor of Minnesota.

Judges and scholars routinely assert that contractual obligations are voluntary or voluntarily assumed. This article considers whether contractual obligations can accurately be characterized in this way. A legal obligation can be regarded as voluntary only if it is substantially understood, and the decision to assume it is intentional and substantially unconstrained. The article focuses on the two least voluntary sources of contractual obligations: standard forms and default rules.Standard form terms are typically unread, commonly misunderstood and difficult to avoid. The article explores the circumstances in which the obligations arising from unread standard form terms can properly be regarded as voluntary, and those in which they cannot. It considers the extent to which the legal response to standard form terms enhances voluntariness in standard form contracting. The article also considers the extent to which the obligations arising from default rules can be regarded as voluntary. Default rules are commonly misunderstood by contracting parties, do not always follow well-established conventions and are difficult to avoid in routine transactions.A growing body of literature offers a voluntaristic rationalisation of default rules and seeks to challenge the idea that external standards play a significant role in shaping contractual obligations. This literature fails to provide a convincing explanation that the criteria at work in the relevant cases can properly be regarded as internal to the contract. The article concludes that contractual obligations in general cannot accurately be characterized as voluntary.

An employee who allegedly defamed his employers by writing letters to investors had no right to be defended under his homeowner’s policy, according to a recent unpublished decision by the California Court of Appeals, interpreting the “business activities” clause of the policy.

Policyholder Michael Southard got into trouble with his bosses when he wrote letters to investors disparaging their management. His employer not only fired him, but sued him for, among other things, defamation. Since this was a tort, he claimed the right to be defended by Allstate, his homeowner’s insurance carrier. Allstate declined, citing the policy provision that stated:

We do not cover bodily injury or property damage arising out of the past or present business activities of an insured person.

The trial court held that it was a jury issue whether the clause was satisfied. Allstate appealed.Southard claimed that he wasn’t engaged in business activities when he wrote the letters, since he was not acting on behalf of his employer or in the course of his job. The clause at issue defined “business” as "Business" is defined as “any full or part-time activity of any kind engaged in for economic gain.”

The appellate court, finding that the language was not ambiguous, concluded that Southard’s employment was a “business activity,” and that his letters, while not on behalf of his employers, nevertheless “arose out of” his employment. Accordingly, Allstate had no duty to defend.

1865: Warren Gamaliel Harding, who will be the first journalist elected President of the United States, as well as the first to tap Hollywood stars (Mary Pickford, Al Jolson, Lillian Russell) as campaigners, is born near what is now Blooming Grove, Ohio.

1889: North and South Dakota are admitted to the Union as the 39th and 40th U.S. states. North Dakota is regarded as 39th because “N” comes before “S” in the alphabet.

1920: Westinghouse Electric Co.’s KDKA (Pittsburgh, Pennsylvania), goes on the air as the first U.S. commercial radio station.

1922: Queensland and Northern Territory Aerial Services (known today by its acronym) begins air mail passenger and operations in Australia.

1936: To combat the growing influence of U.S. commercial radio networks expanding into Canada, the government-owned Canadian Broadcasting Co. is created.

1954: South Carolina lawyer Strom Thurmond becomes the first person in U.S. history to be elected to a major office as a write-in candidate, when he wins election to the U.S. Senate.

1992: One of the fathers of Hollywood, Harold Eugene “Hal” Roach, dies at age 100. His career spanned the gamut from Lonesome Luke and Our Gang comedies to Topper and Of Mice and Men.

2001: Pixar’s Monsters, Inc. opens with the largest opening-day sales of any animated film in history. A sequel is reportedly in the works.

This week, Michelin came out with its first Red Guide of New York dining and hotels. The dining guide had some surprises in its inclusions and omissions. Michelin uses a three-tier, star-based rating system. Michelin’s methodology is not clear from press accounts; what is known is that Michelin “surveyed” 507 New York restaurants in all five boroughs, and only 39 placed. Of those 39, only four achieved a 3-star rating:

Alain Ducasse Jean-Georges Le Bernardin Per Se

And four achieved a 2-star rating:

Bouley Daniel Danube Masa

The remaining 31 were each lucky enough to receive one star.

The Michelin restaurant guide competes with the ubiquitous Zagat survey, which is not red, but maroon and similar in size. Zagat provides scores of up to 30 for three categories (food, décor and service). There are no scores for peer assessment, expenditure per customer, acceptance rate for last minute reservations or bar pass out rate. Zagat “summarize[s] the honest opinions of the thousands of people who share their experiences” and “mandates the completely honest and objective gathering and compiling of . . . surveyors’ ratings and reviews.”

When it comes to elite restaurants, one would think that there is likely some measure of subjectivity in the comparisons. The consistency among the results provides some proof, however, that the rankings could be scientific. For example, Le Bernadin scored three stars from Michelin, and it received “best food in New York” from Zagat.

Celebrity chef Mario Batali, whose restaurant, Babbo, received one star from Michelin, was not happy with his ranking, which put him on the same tier as the Spotted Pig, “a small gastro-pub in the Village.” The N.Y. Times reports:

"They're blowing it," [Batali] said of the reviewers. "They can't put the spotted on the same level as Babbo."

He blames the loud music he plays, a possible bias among the inspectors against Italian cuisine and a style of dining that New Yorkers embrace and Europeans don't.

"It will certainly be controversial for a couple of weeks," Mr. Batali said. "With that few restaurants in the two-star category, people will not take it seriously."

For those who can't get enough news about Who's Who (or Where) in the Legal Academic Hierarchy, our colleagues at the Law Professors Blog Network now have just the site for you: Brian Leiter's Law School Rankings now have their own pages. Leiter's rankings always have their own idiosyncrasies, but if you want to know officially who's hot (San Diego) and who's not (Michigan), and why UTexas really is, dang it, better than Northwestern, it's the place to go.

Adjusted for the size of the schools, here are the schools where you have the greatest chance of landing a job at Major International Law Firm LLP. (The number in parentheses is the school's rank on the LSAT list.)

Caveat: Several well-regarded law schools (including Southern Cal, Iowa, Boston College, North Carolina, Wisconsin, Fordham) were not included in the survey, which means that they may or may not deserve a place in these rankings.